Vanguard Research Tools

Updated Wednesday, December 10, 2008

Research Tools Grade: D

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Vanguard features a minimal amount of research. Basic stock specific research is available but not exactly thorough. There is no market commentary or calendar features at all. The stock screener isn't competitive with competitor's offerings. Also, the investment plan tool is far too basic to be anything more than an absolute starting point for a new investor.

The Vanguard Stocks, Bonds & CDs research page (click on images for larger views):

Individual stock research is provided by Reuters and Standard & Poor's. There doesn't appear to be any daily market commentary.

The stock screener is poorly designed and lacks basic features found in many competitor offerings. For example, below is a view of a screening I ran. For dividend yield, I have to choose from six options instead of, for example, being able to search for a dividend yield of above 3.5%:

As one might expect from Vanguard, their focus is on investing for the long term and setting up long term goals. One feature of the site is an investment plan tool. First, users answer a short questionnaire that asks about investing experience, time horizon and risk tolerance. Based on my long time horizon and high risk tolerance, Vanguard recommended an asset allocation of 80% stocks and 20% bonds:

I am always puzzled by the asset allocation recommendations of tools such as this. If I have a very long time horizon and a high tolerance for risk, and stocks are supposed to generate the highest return over the long term, why shouldn't I be 100% in stocks?

Regardless, once users find a recommended asset allocation, the next step is to select investments. I had a lot of problems with the advice found in the next section. For example: "Although you could build a portfolio of individual stocks, to minimize the risk, you'd need to buy at least 100 stocks carefully chosen to ensure broad diversification." I just don't agree with this assertion and many other recommendations made in this section. Not all advice is terrible, however, as a note about watching out for fees is useful. That's all there really is to the rest of the tool unfortunately. I was expecting a lot more as far as customized advice so mark me down as disappointed.

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